As Julia Gillard noted on the release of the Asian Century white paper, 30 years ago Australia was still a closed and isolated economy, while Asia was still largely “a continent of poverty”.

More than that, she pointed to the “moral paradox’’ of Labor history that a century ago celebrated Australia as a working man’s paradise, supported by barricades against the threat of low Asian wages that shielded “white men’s wages’’.

In the past generation, Australia’s relations with the populous region to our north have been transformed, culminating in the paper which has advocated making Asian studies a core part of school curriculums, among other initiatives.

Our relations with Asia have waxed and waned since the White Australia policy was mostly abandoned in the mid to late 1960s by Coalition governments. Japan became a major trading partner in the 1960s, but after the Whitlam government restored relations with China in 1972, our first big regional engagement was economic reform in the Hawke-Keating governments. This recognition of the need to shift our economic orientation was assisted by Ross Garnaut’s seminal report on the North Asian ascendancy in 1989. Mr Keating understood Asia’s economic significance for Australia and worked hard to build relationships, in particular with Indonesia.

The Hawke government was instrumental in setting up the Asia Pacific Economic Co-operation group in 1989. As prime minister, John Howard took an anti-Keating stance emphasising Australia’s Anglo heritage, but he came to acknowledge the trade potential on our doorstep as China’s economic reform took off. The Asian financial crisis set back closer integration. Australia split with the US to urge that Indonesia be allowed greater flexibility over its IMF loans. However, while government relationships were bolstered, the Asian crisis scared off some Australian businesses. The East Timor incident of 1999 strained Australia’s relationship with Indonesia, but the war on terrorism, and the Bali bombings, brought the countries closer.

Australia’s export exposure to Asia is now higher than most other countries in the region. Government to government ties have also strengthened as we have plugged away at establishing more regional architecture. However, from a business perspective, apart from resource companies, the relationship is not as deep. It is more complex than just resources, with exports of tourism, financial services and education growing. From shipping coal to Japan in the 1970s to now shipping iron ore and coal to China, the trade flow has powered the lights and helped build the infrastructure of our major trading partners, while we have bought electronics and manufactured goods. This trade has underpinned our living standards, but has not brought wide-scale people-to-people contact.

The white paper sets out a new framework which should make it easier for governments to make more economically sensible decisions, but it highlights how many of our domestic policies are not linked to the overarching Asian strategy, and exposes policies which may even be counterproductive to boosting our long-term interests in Asia.

To take the “high-wage, high-skill” road as Ms Gillard mentions in her speech on Sunday launching the white paper, education is important. In the 1980s, Australia had to liberalise its economy to compete with the old low-wage Asia. Today we had to educate an open society to compete in the new wealthier Asia. Yet the deep assumptions that Ms Gillard pointed to still infect Labor’s attitudes to our Asian opportunities.

There is merit in the recommendations to develop Asian studies and languages, and to pushing more of our universities into the top 100. However, to do so, Labor needs to free up universities to pursue not just excellence, but elitism, and fees need to be deregulated.

The competitiveness and efficiency of the tax system must be improved but Labor has ruled out the obvious reform - broadening and raising the GST - to help sharpen the incentives to work, to create new businesses and to save.

Instead of creating labour market flexibility to help business grasp the opportunities of Asia, the Rudd and Gillard governments reregulated the labour market to re-empower its old-Australia union movement that now does not represent the norms of the Australian workforce.

The union movement is resistant to importing cheaper guest workers who could help develop the north but might also threaten union control of the labour monopolies that in turn control the Labor Party.

Unions are also resistant to the privatisation of government monopolies that would assist state government balance sheets and provide investment opportunities while helping finance new growth-facilitating infrastructure.

Ms Gillard’s white paper offered little that would challenge old Labor shibboleths. But if the Labor government cannot make the hard reforms it is unlikely the rest of the country will see the need to change along the lines urged in its white paper.